FSBO’s are a great source of new customers for you, and are an often overlooked demographic. Put yourself in their shoes. (If you’ve ever tried to sell property yourself, you know what I mean).
FSBO’s are:
* An un-tapped resource that many loan officers don’t even know about.
* Do-it-yourself types that are independent minded.
* Fairly knowledgeable about real estate (or at least they think they are!)
* Skeptical of outsiders, because they think you may be a real estate agent, trying to get a commission on their house. (Once you show them you can help them, and for FREE, their resistance melts away).
* Most of all, FSBO’s are looking to save money on real estate commissions, usually 6% of the selling price. On a $400,000 house, this is $24,000 out of their pocket!
FSBO’s need:
* An outside opinion on the real estate market.
* An estimate of the approximate value of their property.
* Marketing materials to help them sell their house.
* Someone they can ask questions of, and someone who can act a trusted advisor to them during the process.
* A way to weed-out all the tire kickers and time wasters that want to view the house, but who are NOT qualified to make a buying-decision (because they don’t have financing set-up).
* New financing set-up for the new property they will be buying, from the proceeds of the sale of their home.
As a loan officer you can provide all of this to the FSBO prospect and more. You’ll not only save them time and money, but a lot of heartache as well. And in return, the FSBO, will provide you with a steady stream of interested buyers who are looking to purchase a home.
And remember, even if the buying prospect doesn’t purchase the FSBO home you are dealing with—you still win! You STILL get a prospect who needs financing arranged and is readily looking for a property. It’s a perfect match—and everybody wins!
You’ll want to keep the above points in mind when you make your approach to the FSBO client. These are the hot-button points to make when speaking to them. I usually advise sending a letter first, followed by a phone call.
If you aren’t already considering FSBO’s into your business plan, you’re missing a huge opportunity and a virtually untapped market. Yes, it takes a bit of effort on your part. But a little bit of time invested upfront, can pay huge dividends down the road. You’ve got nothing to lose, so give it a try!
Thursday, February 28, 2008
Monday, February 25, 2008
How To Approach Internet Mortgage Leads As A Loan Officer
One question I get asked a lot is “How do I approach Internet mortgage leads?” As you may already know, I generate 90% of my business directly from these types of leads and have found them a great resource for several reasons:
* When you call people, they are ready to buy.
* People will take your calls and even return your messages, because they actually inputted the lead and it is not a cold call.
* You can begin pricing the loan out before you make the call because much of their information is contained on the lead already.
* Online leads exist for all loan types: refinance, purchase, and sub-prime loans.
Keep in mind that there are several drawbacks to these types of leads as well:
* If you buy from an unscrupulous lead provider, the Internet leads may be old, outdated, or have been resold several times to multiple brokers. (Always look for a money-back guarantee and invest as little as possible upfront, so you can “test” the lead company out).
* The customer probably put their Internet inquiry on other websites too, so many other brokers will be calling too. So you have to have your sales pitch down and effectively close the sale. Be forewarned, Internet shoppers are rate shoppers until the end, so close the loan quickly and get payment upfront!
* Be prepared to deal with competing, uneducated, low-life, lying loan officers who will say anything to get the sale.
With that said, here’s how I approach my Internet mortgage leads and why I have had such an excellent success rate:
1. I always start by calling the lead as soon as I receive it. I want the customer to hear me first and remember who I am.
2. I never throw a lead away. Until I get a firm, vocal, “no” from a live person on the phone, I will keep on calling and leaving my “teaser” rate message (see below). Eventually, the customer will call you back and tell you that they are “interested” or “all set”.
3. I never send emails out to people who requested information through the lead. They will never write back, and if they do, they will refuse to speak with you and waste your time.
4. Customers will try to commoditize loan officers down to just rate, and I refuse to be pigeon-holed and boiled down to the lowest common denominator. As we all know, simply the lowest rate may not be there best option. I want to talk to a live person and uncover exactly what they want to accomplish through the loan.
5. Always try to get the customer at work first. They will be more polite to talk to, and will take the time to listen to what you have to say. If not at work, then call their home or cell number.
6. If you call them at home, and a spouse or partner answers, try to get as much information as you can about what they are looking to do. You do not have to actually talk to the person on the lead to get the information you are looking for. (I simply fill-out one of my mortgage pre-qual worksheets from my Sink or Swim Loan Closing System, and don’t bother to waste time by taking a full-application this early in the process. I want to get a handle on the loan first).
7. Try not to leave a message on their voicemail or answering machine the first few times you call. You want to speak to a real person. If you have to leave a message, use my special “teaser” message. This always gets people to call me back and has been very effective: “Hi (prospect’s name). This is (your name) from (your company) We had you on our interest rate watch list and I just wanted to call and let you know that there has been a change in the market. Please call me at (leave your number), so I can update you on the rates. I should be here until about 6:30 PM. I’m waiting to hear back from a couple of other investors, so I’ll keep looking for a better deal for you. Once again, this is (your name) from (your company). Please call me as soon as you can at (leave your number again). Hope to speak to you soon.”
8. Once you have spoken to the customer and gathered the necessary information, close the conversation by saying that you will email them a proposal with interest rates and several loan scenarios. Never, never, never, say what the rate is over the phone. You want the customer to be expecting your proposal. This gets them to actually read it.
9. Call to confirm that they have actually received the proposal and go over it with them. This will give you something to talk about and is a good reason to call them back, without seeming like a “bother”. It also helps to establish trust and make the prospect feel more comfortable, especially since they are doing business entirely over the phone.
10. Answer as many questions as you can and explain how simple and easy the entire loan process will be with you. Try to add as much value as you can while you close the sale.
There are many different ways to approach leads. I have tried to systemize the process as much as possible in order to be successful. Hope these tips help!
* When you call people, they are ready to buy.
* People will take your calls and even return your messages, because they actually inputted the lead and it is not a cold call.
* You can begin pricing the loan out before you make the call because much of their information is contained on the lead already.
* Online leads exist for all loan types: refinance, purchase, and sub-prime loans.
Keep in mind that there are several drawbacks to these types of leads as well:
* If you buy from an unscrupulous lead provider, the Internet leads may be old, outdated, or have been resold several times to multiple brokers. (Always look for a money-back guarantee and invest as little as possible upfront, so you can “test” the lead company out).
* The customer probably put their Internet inquiry on other websites too, so many other brokers will be calling too. So you have to have your sales pitch down and effectively close the sale. Be forewarned, Internet shoppers are rate shoppers until the end, so close the loan quickly and get payment upfront!
* Be prepared to deal with competing, uneducated, low-life, lying loan officers who will say anything to get the sale.
With that said, here’s how I approach my Internet mortgage leads and why I have had such an excellent success rate:
1. I always start by calling the lead as soon as I receive it. I want the customer to hear me first and remember who I am.
2. I never throw a lead away. Until I get a firm, vocal, “no” from a live person on the phone, I will keep on calling and leaving my “teaser” rate message (see below). Eventually, the customer will call you back and tell you that they are “interested” or “all set”.
3. I never send emails out to people who requested information through the lead. They will never write back, and if they do, they will refuse to speak with you and waste your time.
4. Customers will try to commoditize loan officers down to just rate, and I refuse to be pigeon-holed and boiled down to the lowest common denominator. As we all know, simply the lowest rate may not be there best option. I want to talk to a live person and uncover exactly what they want to accomplish through the loan.
5. Always try to get the customer at work first. They will be more polite to talk to, and will take the time to listen to what you have to say. If not at work, then call their home or cell number.
6. If you call them at home, and a spouse or partner answers, try to get as much information as you can about what they are looking to do. You do not have to actually talk to the person on the lead to get the information you are looking for. (I simply fill-out one of my mortgage pre-qual worksheets from my Sink or Swim Loan Closing System, and don’t bother to waste time by taking a full-application this early in the process. I want to get a handle on the loan first).
7. Try not to leave a message on their voicemail or answering machine the first few times you call. You want to speak to a real person. If you have to leave a message, use my special “teaser” message. This always gets people to call me back and has been very effective: “Hi (prospect’s name). This is (your name) from (your company) We had you on our interest rate watch list and I just wanted to call and let you know that there has been a change in the market. Please call me at (leave your number), so I can update you on the rates. I should be here until about 6:30 PM. I’m waiting to hear back from a couple of other investors, so I’ll keep looking for a better deal for you. Once again, this is (your name) from (your company). Please call me as soon as you can at (leave your number again). Hope to speak to you soon.”
8. Once you have spoken to the customer and gathered the necessary information, close the conversation by saying that you will email them a proposal with interest rates and several loan scenarios. Never, never, never, say what the rate is over the phone. You want the customer to be expecting your proposal. This gets them to actually read it.
9. Call to confirm that they have actually received the proposal and go over it with them. This will give you something to talk about and is a good reason to call them back, without seeming like a “bother”. It also helps to establish trust and make the prospect feel more comfortable, especially since they are doing business entirely over the phone.
10. Answer as many questions as you can and explain how simple and easy the entire loan process will be with you. Try to add as much value as you can while you close the sale.
There are many different ways to approach leads. I have tried to systemize the process as much as possible in order to be successful. Hope these tips help!
Friday, February 22, 2008
How The Mortgage Net Branch Really Makes It Money
In the past few issues, we’ve been discussing net branches, and the advantages and disadvantages of this type of loan origination. I covered the reasons why loan officers decide to go out on their own, and what makes one net branch better than another. There are a myriad of choices and literally thousands to choose from! Ultimately, the most important factor in any decision is deciding which company will best serve YOUR needs so you can achieve the level of success you deserve. If the company only talks about themselves, then you know who comes first! They do!!!!
In evaluating net branches, I thought it best to let you Sink or Swimmers in on a little secret. It’s something that nobody talks about and is one of the best kept secrets in the industry. Certainly the net branches won’t tell you, but today I am going to spill the beans. I am going to tell you exactly how the net branches make their money, so you can better understand how you will make YOURS.
Net branches make money two ways:
1. They make money from you, the loan officer.
OR
2. They make money from the bank.
Most of the time, it is a combination of the two. Here’s how it works.
Net branches may make money from you by:
* Charging an in-house processing fee to do your loans.
* Charging an upfront joining fee or flat monthly fee to do business with them and be a part of their company.
* Charging a flat rate per-file fee on each and every loan file that passes through them (different than the processing fee, this is usually listed as a flat rate and they will forgo any commission and give you 100% commission of the YSP, yield spread premium, from the lender).
* Charging you for the customer’s credit reports, appraisals, etc. and making you eat the cost if the customer doesn’t pay for these things upfront.
* Making you pay for your own training (which they provide) or making you attend pep-rallies or buy other “motivational” material. (I am not going to say who this is, but I am sure you’ve heard of them!)
* Tacking on other little administrative “expenses” here and there under mysterious names, (if you’ve ever tried to decipher a phone bill and figure out all the small charges you know what I mean, so watch out!).
Net branches make money from the bank by:
* Taking a percentage of the final commission split. So if you are getting 80% commission, they get 20% of the total take.
* Giving you “in-house” rate sheets that the lender sends them, and they in-turn mark-up and redistribute to you. They take a “mini” spread on each and every loan you do. In effect you are getting retail rates and not wholesale rates from the lender. The net branch is taking a cut off the top of your YSP commission which YOU WILL NEVER EVEN SEE, because it is on the back-end from the lender. If they insist you only take their rate-sheets from the HQ, watch out!
* “Kick-backs” and in-kind deals for referring business to their preferred providers, whether it be lenders, appraisers, title companies, etc. They may have a business relationship set-up with them. If it means lower costs, then it’s great for you. If the costs are higher than what’s normal, who do you figure is pocketing the difference?
* Basis-points agreements in place with lenders, where on a certain loan volume, the commissions and incentives to them increase (these are usually never passed onto the loan officer).
Now, of course, the net branch is entitle to make money. They deserve to. After all, they are helping you get started in your own mortgage business. Firms may do some or all of the above. It will be a combination of money from you and money from the lender. Ultimately, it’s up to you to ask questions and determine how both you and they will be paid.
What you want to look for, is a net branch that puts its loan officers first and goes the extra mile to help you succeed. Remember, if you are making the kind of money you deserve and achieving your goals, the net branch will also achieve theirs.
In next weeks issue, I am going to name some of the best names in mortgage net branching and who you should consider looking at before making a final decision.
In evaluating net branches, I thought it best to let you Sink or Swimmers in on a little secret. It’s something that nobody talks about and is one of the best kept secrets in the industry. Certainly the net branches won’t tell you, but today I am going to spill the beans. I am going to tell you exactly how the net branches make their money, so you can better understand how you will make YOURS.
Net branches make money two ways:
1. They make money from you, the loan officer.
OR
2. They make money from the bank.
Most of the time, it is a combination of the two. Here’s how it works.
Net branches may make money from you by:
* Charging an in-house processing fee to do your loans.
* Charging an upfront joining fee or flat monthly fee to do business with them and be a part of their company.
* Charging a flat rate per-file fee on each and every loan file that passes through them (different than the processing fee, this is usually listed as a flat rate and they will forgo any commission and give you 100% commission of the YSP, yield spread premium, from the lender).
* Charging you for the customer’s credit reports, appraisals, etc. and making you eat the cost if the customer doesn’t pay for these things upfront.
* Making you pay for your own training (which they provide) or making you attend pep-rallies or buy other “motivational” material. (I am not going to say who this is, but I am sure you’ve heard of them!)
* Tacking on other little administrative “expenses” here and there under mysterious names, (if you’ve ever tried to decipher a phone bill and figure out all the small charges you know what I mean, so watch out!).
Net branches make money from the bank by:
* Taking a percentage of the final commission split. So if you are getting 80% commission, they get 20% of the total take.
* Giving you “in-house” rate sheets that the lender sends them, and they in-turn mark-up and redistribute to you. They take a “mini” spread on each and every loan you do. In effect you are getting retail rates and not wholesale rates from the lender. The net branch is taking a cut off the top of your YSP commission which YOU WILL NEVER EVEN SEE, because it is on the back-end from the lender. If they insist you only take their rate-sheets from the HQ, watch out!
* “Kick-backs” and in-kind deals for referring business to their preferred providers, whether it be lenders, appraisers, title companies, etc. They may have a business relationship set-up with them. If it means lower costs, then it’s great for you. If the costs are higher than what’s normal, who do you figure is pocketing the difference?
* Basis-points agreements in place with lenders, where on a certain loan volume, the commissions and incentives to them increase (these are usually never passed onto the loan officer).
Now, of course, the net branch is entitle to make money. They deserve to. After all, they are helping you get started in your own mortgage business. Firms may do some or all of the above. It will be a combination of money from you and money from the lender. Ultimately, it’s up to you to ask questions and determine how both you and they will be paid.
What you want to look for, is a net branch that puts its loan officers first and goes the extra mile to help you succeed. Remember, if you are making the kind of money you deserve and achieving your goals, the net branch will also achieve theirs.
In next weeks issue, I am going to name some of the best names in mortgage net branching and who you should consider looking at before making a final decision.
20 Habits Of Top Producers In The Mortgage Industry And Why You Should Follow Their Lead
Top producers aren’t made overnight and the skills they use to generate more business can’t be learned in a day. However, I’m going to try and isolate the skills that I’ve seen in the top producers that I’ve worked with, and the reason for their success.
1. Top producers are extremely organized and on top of things. They never let a small detail slip through the cracks because they know that tiny problems upfront can lead to BIG problems at the closing table.
2. Top producers are proactive. They look ahead. They have foresight and try to steer clear of problems before they arise.
3. Top producers hedge their bets. They have thoroughly analyzed the customer, and have multiple loan scenarios ready to sell them on. If the customer’s needs change or they want to compare multiple loan programs, there is a proposal already prepared.
4. Top producers know the mortgage market. They watch the rates closely and lock only when the customer feels comfortable with the rate they are getting and are ready to move forward. This way, the customer feels a part of the process and you, as the trusted advisor, have worked with them to get the best rate available given their situation.
5. Top producers communicate. They stay in constant contact with the customer, their processor, and any other third parties they are working with on the loan.
6. Top producers know when to draw the line. They know that they can’t do everything themselves and they have systems and processes set in place to streamline their mortgage business. Once they push the loan file up to a certain point, they know where their job ends and the processors job begins.
7. Top producers have a start and stop time. Their work doesn’t take over their whole life. They know that things have a tendency to take over whatever available time there is. By setting firm deadlines they know they can accomplish much more than leaving things open-ended.
8. Top producers make the hard sales calls first. They don’t put off the trouble customers. They take care of issues upfront so that the rest of their day is trouble free.
9. Top producers don’t socialize in the office. They go to work to work and make money, not to meet new drinking buddies or get a date. They also don’t hang-out in the cafeteria, lunch room or at the water cooler. They come into the office on a mission to sell loans and they get straight to work.
10. Top producers make to-do lists then cross them off. At the end of the day, they update the list and start over again tomorrow. By writing things down they hold themselves accountable.
11. Top producers are extremely well dressed and take pride in their appearance. They know that a sloppy exterior communicates a sloppy loan experience for the customer. People trust people that are successful and look the part.
12. Top producers know that they are only as good as their last loan. To sell loans you’ve got to SELL LOANS, and they know they can never take their foot off the pedal. As soon as they do, the pipeline dries up.
13. Top producers love what they do. They enjoy the challenge of the mortgage industry and the daily excitement. They also love helping people achieve their dreams, buying or refinancing their home.
14. Top producers read daily. They study the mortgage trade press and know what’s happening in the larger industry overall. This gives them a much broader appeal as they understand the multiple dynamics in the marketplace.
15. Top producers know the rate sheets inside and out. They can add numbers in their head and they have a “price” in mind when quoting to the customer. They don’t get lost on the rate sheet because they know exactly where to look on paper or online.
16. Top producers are fair. They know how much money they want to make on every deal, but price loans within reason. They understand that a customer getting a fair deal is worth at least 2 or 3 more loans over the customer’s lifetime.
17. Top producers ask for referrals. They tell the customer to keep them in mind if they come across anyone who needs a mortgage or wants a free quote.
18. Top producers market daily. They take at least one step a day towards getting the word out about them by contacting new referral partners, associates and past customers.
19. Top producers know their wholesale lender account reps, appraisers and underwriters on the loan. They know that no loan happens in a vacuum and that if they have bad relations once with a particular partner, they will have even more issues the next time around with another loan.
20. Top producers listen to advice. They know that being in the mortgage business is a daily education and they aren’t afraid to ask the hard or stupid questions. This, in turn makes them a better trained loan officer and more successful.
Remember, to be effective, these 20 success habits must be implemented daily over the entire course of your career. Doing a step or two for a few days, then forgetting to do them, is just as good as not doing anything at all. You won’t see results and you’ll get frustrated with the process.
To move your business moving forward and become a top producer, do what top producers do and you’ll have what top producers have.
1. Top producers are extremely organized and on top of things. They never let a small detail slip through the cracks because they know that tiny problems upfront can lead to BIG problems at the closing table.
2. Top producers are proactive. They look ahead. They have foresight and try to steer clear of problems before they arise.
3. Top producers hedge their bets. They have thoroughly analyzed the customer, and have multiple loan scenarios ready to sell them on. If the customer’s needs change or they want to compare multiple loan programs, there is a proposal already prepared.
4. Top producers know the mortgage market. They watch the rates closely and lock only when the customer feels comfortable with the rate they are getting and are ready to move forward. This way, the customer feels a part of the process and you, as the trusted advisor, have worked with them to get the best rate available given their situation.
5. Top producers communicate. They stay in constant contact with the customer, their processor, and any other third parties they are working with on the loan.
6. Top producers know when to draw the line. They know that they can’t do everything themselves and they have systems and processes set in place to streamline their mortgage business. Once they push the loan file up to a certain point, they know where their job ends and the processors job begins.
7. Top producers have a start and stop time. Their work doesn’t take over their whole life. They know that things have a tendency to take over whatever available time there is. By setting firm deadlines they know they can accomplish much more than leaving things open-ended.
8. Top producers make the hard sales calls first. They don’t put off the trouble customers. They take care of issues upfront so that the rest of their day is trouble free.
9. Top producers don’t socialize in the office. They go to work to work and make money, not to meet new drinking buddies or get a date. They also don’t hang-out in the cafeteria, lunch room or at the water cooler. They come into the office on a mission to sell loans and they get straight to work.
10. Top producers make to-do lists then cross them off. At the end of the day, they update the list and start over again tomorrow. By writing things down they hold themselves accountable.
11. Top producers are extremely well dressed and take pride in their appearance. They know that a sloppy exterior communicates a sloppy loan experience for the customer. People trust people that are successful and look the part.
12. Top producers know that they are only as good as their last loan. To sell loans you’ve got to SELL LOANS, and they know they can never take their foot off the pedal. As soon as they do, the pipeline dries up.
13. Top producers love what they do. They enjoy the challenge of the mortgage industry and the daily excitement. They also love helping people achieve their dreams, buying or refinancing their home.
14. Top producers read daily. They study the mortgage trade press and know what’s happening in the larger industry overall. This gives them a much broader appeal as they understand the multiple dynamics in the marketplace.
15. Top producers know the rate sheets inside and out. They can add numbers in their head and they have a “price” in mind when quoting to the customer. They don’t get lost on the rate sheet because they know exactly where to look on paper or online.
16. Top producers are fair. They know how much money they want to make on every deal, but price loans within reason. They understand that a customer getting a fair deal is worth at least 2 or 3 more loans over the customer’s lifetime.
17. Top producers ask for referrals. They tell the customer to keep them in mind if they come across anyone who needs a mortgage or wants a free quote.
18. Top producers market daily. They take at least one step a day towards getting the word out about them by contacting new referral partners, associates and past customers.
19. Top producers know their wholesale lender account reps, appraisers and underwriters on the loan. They know that no loan happens in a vacuum and that if they have bad relations once with a particular partner, they will have even more issues the next time around with another loan.
20. Top producers listen to advice. They know that being in the mortgage business is a daily education and they aren’t afraid to ask the hard or stupid questions. This, in turn makes them a better trained loan officer and more successful.
Remember, to be effective, these 20 success habits must be implemented daily over the entire course of your career. Doing a step or two for a few days, then forgetting to do them, is just as good as not doing anything at all. You won’t see results and you’ll get frustrated with the process.
To move your business moving forward and become a top producer, do what top producers do and you’ll have what top producers have.
Tuesday, February 19, 2008
Where To Find Pre-Foreclosure Mortgage Leads For Your Mortgage Business
One of my goals is to offer you valuable information that will immediately impact the bottom-line of your mortgage business. What I find lacking in many of the “professional” trade publications out there, is real-life ACTIONABLE information you can take-away today and begin generating actual business from tomorrow.
Many of you have emailed me asking about new sources of business. And, besides beating down realtors door’s (which every other monkey loan officer is doing), there are huge segments of the market you may have overlooked. With interest rates rising fast, personal bankruptcies and foreclosures are increasing steadily. And this is a market segment you CAN NOT IGNORE.
Properties in foreclosure can be a boondoggle for you whether you are an investor looking to pick-up a bargain property, or a loan officer ready to swoop-in and save someone’s property from the Repo Man.
For mortgage people, foreclosures can generate business 3 ways:
1. You can try and fund the property, pay off the note and save it from the bank. (Be aware that not all lenders, especially A-paper will do a property in foreclosure).
2. You can secure the new loan from the new buyer of the property and provide financing as a purchase loan.
3. You can get the person who was foreclosed upon, a new loan for a new property. Many B-paper sub-prime lenders will finance a person even just 1-day out of bankruptcy.
These are 3 immediate things a pre-foreclosure property can give you. Here are some methods you can use to locate these type of deals.
1. Referrals from title companies, real estate attorneys, other lenders etc. There are many 3rd parties involved in the foreclosure process and nothing happens in a vacuum. Chances are, you will hear about it if you have your ear to the ground.
2. Check the newspaper under the properties section. Also, be sure to read the smaller dailies and weeklies that are out there.
3. Subscribe to a clipping service that find the leads for you. Many press clipping companies will also clip other information if you ask. Check in the phone book under media, press or public relations.
4.Subscribe to an internet site such as Foreclosureleads.com, Foreclosures.com, Foreclosurelistings.com Prices vary by service and state. You will want to investigate their source for the data to be sure you are getting the most accurate and up-to-date information.
5. Go directly down to the courthouse yourself and ask. Property undergoing foreclosure is public information and you have a right to get access to it. This is the most direct and cost effective route, though it may be very intensive.
In conclusion, don’t give-up because all the refinance loans have disappeared. Change your strategy and try something different. Top producers succeed because they can adapt to market conditions and are willing to go where others won’t. Take steps today, and I can guarantee you will have more fresh loans tomorrow.
Many of you have emailed me asking about new sources of business. And, besides beating down realtors door’s (which every other monkey loan officer is doing), there are huge segments of the market you may have overlooked. With interest rates rising fast, personal bankruptcies and foreclosures are increasing steadily. And this is a market segment you CAN NOT IGNORE.
Properties in foreclosure can be a boondoggle for you whether you are an investor looking to pick-up a bargain property, or a loan officer ready to swoop-in and save someone’s property from the Repo Man.
For mortgage people, foreclosures can generate business 3 ways:
1. You can try and fund the property, pay off the note and save it from the bank. (Be aware that not all lenders, especially A-paper will do a property in foreclosure).
2. You can secure the new loan from the new buyer of the property and provide financing as a purchase loan.
3. You can get the person who was foreclosed upon, a new loan for a new property. Many B-paper sub-prime lenders will finance a person even just 1-day out of bankruptcy.
These are 3 immediate things a pre-foreclosure property can give you. Here are some methods you can use to locate these type of deals.
1. Referrals from title companies, real estate attorneys, other lenders etc. There are many 3rd parties involved in the foreclosure process and nothing happens in a vacuum. Chances are, you will hear about it if you have your ear to the ground.
2. Check the newspaper under the properties section. Also, be sure to read the smaller dailies and weeklies that are out there.
3. Subscribe to a clipping service that find the leads for you. Many press clipping companies will also clip other information if you ask. Check in the phone book under media, press or public relations.
4.Subscribe to an internet site such as Foreclosureleads.com, Foreclosures.com, Foreclosurelistings.com Prices vary by service and state. You will want to investigate their source for the data to be sure you are getting the most accurate and up-to-date information.
5. Go directly down to the courthouse yourself and ask. Property undergoing foreclosure is public information and you have a right to get access to it. This is the most direct and cost effective route, though it may be very intensive.
In conclusion, don’t give-up because all the refinance loans have disappeared. Change your strategy and try something different. Top producers succeed because they can adapt to market conditions and are willing to go where others won’t. Take steps today, and I can guarantee you will have more fresh loans tomorrow.
Saturday, February 16, 2008
The Straight Dope On Mortgage Refinance Loans
Times are tough, there is no doubt about that. Interest rates are inching up and much of the hub-bub of the refinance boom is over. It’s the difficult loans that remain, amongst them mostly purchases.
It’s time to face facts. The A-paper good credit refinance loans are over. There is little chance that you’ll be able to convince anyone to refinance, unless they are in extreme dire financial straights and have a tremendous amount of debt to pay off (and in that case, they are probably sub-prime borrowers anyway). Because consumers are interest rate sensitive, even though they are combining total debt into a lower payment, you will be hard-pressed to get them to trade their 5.25% mortgage rate for a 7.5% rate. It simply won’t happen.
In order to sell these types of refinance loans (combining and rolling debt into the mortgage), you will have to hit the customer’s hot buttons. Are they concerned about lowering the monthly out-go? Have they recently had a major financial change in their life? Lost their job? Unexpected bills? Whatever the reason, the customer’s immediate concern is the monthly cash flow. They aren’t thinking long term, and what this will do to their financial future. All they care about is getting back on their feet. And this is where YOU can help. But do it if it only makes sense. Don’t sell a loan if you yourself wouldn’t do the same thing.
Know that long term, when you roll debt into a mortgage, you pay much more on that debt than you ever would by paying it off yourself. You end-up carrying the debt over a much longer term, 30 years on a 30 year note, and the accumulated total interest charged is much, much higher. Even tens of thousands of dollars higher!
Yes, there are tax benefits to this and you can deduct the interest from your mortgage off of your taxes. But, what happens cash-flow-wise is that the customer is stuck with an elevated monthly mortgage payment over the LONG TERM. Short term, the combined total monthly cash flow is lower by combining debt, but long term their monthly mortgage payment will be higher than what they originally started with.
In order words if the customer simply got a debt consolidation loan or a HELOC from their bank, at least when the debt is finally paid off, they would still have the same low monthly mortgage they have now. By paying debt though refinancing, long term the customer shoots themselves in the foot by paying a higher interest rate and having a higher monthly mortgage payment (which will never go back down unless they refinance again or pay off the note).
These types of refinance loans made sense when rates were low and customers were cutting both their monthly mortgage rate and monthly payment. It was logical and the financial benefits could be seen in black and white. Nowadays, these debt-consolidation mortgage loans are almost un-sellable. It’s simple economics and no matter how you try to push it, it’s a very hard sell indeed. You would not only be doing the customer a disservice but yourself.
Give up on these types of refinance loans for now. Focus on purchase loans and sub-prime. That’s where the money is and that’s how you’re going to succeed in this market.
It’s time to face facts. The A-paper good credit refinance loans are over. There is little chance that you’ll be able to convince anyone to refinance, unless they are in extreme dire financial straights and have a tremendous amount of debt to pay off (and in that case, they are probably sub-prime borrowers anyway). Because consumers are interest rate sensitive, even though they are combining total debt into a lower payment, you will be hard-pressed to get them to trade their 5.25% mortgage rate for a 7.5% rate. It simply won’t happen.
In order to sell these types of refinance loans (combining and rolling debt into the mortgage), you will have to hit the customer’s hot buttons. Are they concerned about lowering the monthly out-go? Have they recently had a major financial change in their life? Lost their job? Unexpected bills? Whatever the reason, the customer’s immediate concern is the monthly cash flow. They aren’t thinking long term, and what this will do to their financial future. All they care about is getting back on their feet. And this is where YOU can help. But do it if it only makes sense. Don’t sell a loan if you yourself wouldn’t do the same thing.
Know that long term, when you roll debt into a mortgage, you pay much more on that debt than you ever would by paying it off yourself. You end-up carrying the debt over a much longer term, 30 years on a 30 year note, and the accumulated total interest charged is much, much higher. Even tens of thousands of dollars higher!
Yes, there are tax benefits to this and you can deduct the interest from your mortgage off of your taxes. But, what happens cash-flow-wise is that the customer is stuck with an elevated monthly mortgage payment over the LONG TERM. Short term, the combined total monthly cash flow is lower by combining debt, but long term their monthly mortgage payment will be higher than what they originally started with.
In order words if the customer simply got a debt consolidation loan or a HELOC from their bank, at least when the debt is finally paid off, they would still have the same low monthly mortgage they have now. By paying debt though refinancing, long term the customer shoots themselves in the foot by paying a higher interest rate and having a higher monthly mortgage payment (which will never go back down unless they refinance again or pay off the note).
These types of refinance loans made sense when rates were low and customers were cutting both their monthly mortgage rate and monthly payment. It was logical and the financial benefits could be seen in black and white. Nowadays, these debt-consolidation mortgage loans are almost un-sellable. It’s simple economics and no matter how you try to push it, it’s a very hard sell indeed. You would not only be doing the customer a disservice but yourself.
Give up on these types of refinance loans for now. Focus on purchase loans and sub-prime. That’s where the money is and that’s how you’re going to succeed in this market.
Wednesday, February 13, 2008
The Saddest Paycheck Of All In The Mortgage Industry When Just Starting Out As A Loan Officer
I get a lot of emails from loan officers who are currently working for a mortgage company, but are looking to advance their career and go out on their own. When they see the kind of money that can be made in this business, it’s no wonder they aren’t satisfied with their 50% commission spread (or even less!).
When I first started in the industry, my commission spread was 20% of the yield spread premium or YSP. And, if that wasn’t bad enough, we worked on teams of three people—two loan officers and a processor. This meant that any commissions I and my team earned, had to be split three-ways amongst us all. I’m not kidding! My commission after all was said and done was a measly 6.5-7.0% of the YSP. So, on a $3,000 loan, I would make about $200 at most. You don’t want to see what it looked like after they took taxes-out. Absolutely pitiful. Being ignorant (of the mortgage industry), didn’t make me stupid.
That was many years ago. You can see why I was eager to get out of there ASAP. Of course, not having any mortgage experience at all, at the time, I didn’t know any better. I had no idea what the “reasonable” commission structure was. I figured this was how the industry worked. How shocked I was when my eyes were opened. And to think on that original $3,000 loan, I could have at least had $1,500 or more (depending on the mortgage company). But, I have no regrets because it gave me my start and is the main reason I am successful today.
I’m sure many of you encountered the same dilemma as I did. You have to start somewhere. You have to learn the business inside and out. You have to put a stake in the ground. So, no matter where you work currently, or how bad you think the pay scale is, think of me and my first loan and my sad paycheck. ;-)
My point is, learn all you can learn. Observe everything. Take lots of notes and ask questions. Be curious. Make contacts with as many wholesale reps as you can. And network like crazy. Yes, there is a steep learning curve to this business. The first 6 months are grueling, but if you keep the faith and learn as you go, your rewards won’t be too far away.
And even if you can’t stand the mortgage firm you currently are with, the good news is that there is always a way out. Mortgage companies are always hiring and bigger commission checks may be only a phone call and an interview away. :-)
When I first started in the industry, my commission spread was 20% of the yield spread premium or YSP. And, if that wasn’t bad enough, we worked on teams of three people—two loan officers and a processor. This meant that any commissions I and my team earned, had to be split three-ways amongst us all. I’m not kidding! My commission after all was said and done was a measly 6.5-7.0% of the YSP. So, on a $3,000 loan, I would make about $200 at most. You don’t want to see what it looked like after they took taxes-out. Absolutely pitiful. Being ignorant (of the mortgage industry), didn’t make me stupid.
That was many years ago. You can see why I was eager to get out of there ASAP. Of course, not having any mortgage experience at all, at the time, I didn’t know any better. I had no idea what the “reasonable” commission structure was. I figured this was how the industry worked. How shocked I was when my eyes were opened. And to think on that original $3,000 loan, I could have at least had $1,500 or more (depending on the mortgage company). But, I have no regrets because it gave me my start and is the main reason I am successful today.
I’m sure many of you encountered the same dilemma as I did. You have to start somewhere. You have to learn the business inside and out. You have to put a stake in the ground. So, no matter where you work currently, or how bad you think the pay scale is, think of me and my first loan and my sad paycheck. ;-)
My point is, learn all you can learn. Observe everything. Take lots of notes and ask questions. Be curious. Make contacts with as many wholesale reps as you can. And network like crazy. Yes, there is a steep learning curve to this business. The first 6 months are grueling, but if you keep the faith and learn as you go, your rewards won’t be too far away.
And even if you can’t stand the mortgage firm you currently are with, the good news is that there is always a way out. Mortgage companies are always hiring and bigger commission checks may be only a phone call and an interview away. :-)
Sunday, February 10, 2008
The Next Great Mortgage Boom, Are You Ready?
First there was the refinance boom--historic super low rates where every loan was a vanilla slam dunk. Quick and easy cash and the loans sailed through unscathed.
Then came the regular ARMs--because rates were rising and people still wanted those low “bragging rights” rates. They simply had to have a rate below 5% so they could one-up the Joneses at the next BBQ and prove how smart they were.
Next were the 4-payment plan loans and option ARMs--because people wanted flexibility and needed to keep their monthly payments low but still wanted the big house. Who cares if these were possibly indexed to a foreign exchange (The LIBOR) and extremely volatile?! With a choice of four payments every month what could go wrong?
Then there were the interest-only loans which became very popular--heck the rich and famous have known about these for years. They only pay interest and invest the extra equity in the stock market instead of paying the principal money to the bank. It’s the ultimate leverage. But the interest-only loans came with a dark side--negative amortization. People didn’t exactly know what they were getting themselves into. They wanted to play fund manager and, of course, they wanted low monthly payments. Little did they realize they might find themselves hanging up-side down with negative equity at the time of sale.
Silently, the reverse mortgages trickled in--because rates were rising, oil prices went up, inflation increased costs, and seniors couldn’t afford their medication. With their house being the only thing they had left, people figured if I got it, why not spend it? The nursing home would just try to get their grubby hands on it anyway. Hell no to that!
Next came the “cut off your ARM despite your rate” crowd and the panic of a volatile economy. “You better get into a fixed rate before it’s too late”, being their mantra. That’s where we are today since many of the early ARM’s from 3 to 7 years ago are now coming due. It’s funny, you’ll hear these ads all over the radio, trying to get people to convert. Some even use scare tactics with amusing roller coaster sounds and racks being stretched in the background. How creative!
The next great mortgage boom, I predict, will be the fixed 40 and 50 year mortgage. Many of you who I’ve spoken to on the phone and through email, have said the very same thing.
Look for more mortgage innovation to come as rates continue to rise. With inflated pricing in the housing market, longer fixed loans are the only way to keep rates low enough for many people to qualify for a home. Not to mention that people seem to like the idea of having a fixed payment per month versus any of the ARM options.
Keep in mind that many borrowers never intend to stay in the property for the full term of the loan, and will probably sell long before. Heck, a 70 year old taking out a 50 year mortgage won’t even be alive by then! He’ll be 120 years old! But the lenders don’t care as long as he pays his bills.
Currently, there are only a few lenders offering loans with these terms, but be on the look out for many more to come. Mortgage lenders have always been creative with their financing and keeping interest rates low (no matter what the term) is a great benefit for consumers. It helps get people into homes and that’s what counts. Keeping the real estate market liquid is crucial to the economy and lenders know this!
As a broker, branch manager or loan officer, if you want to survive in this competitive and cutthroat market, you’ve got to be aware of what’s in store. My advice is to focus on the ARM conversions for now but keep an eye out for the 40 and 50 year fixed loans arriving everywhere shortly. Only then will you be in a position to capitalize on the next great mortgage boom.
Then came the regular ARMs--because rates were rising and people still wanted those low “bragging rights” rates. They simply had to have a rate below 5% so they could one-up the Joneses at the next BBQ and prove how smart they were.
Next were the 4-payment plan loans and option ARMs--because people wanted flexibility and needed to keep their monthly payments low but still wanted the big house. Who cares if these were possibly indexed to a foreign exchange (The LIBOR) and extremely volatile?! With a choice of four payments every month what could go wrong?
Then there were the interest-only loans which became very popular--heck the rich and famous have known about these for years. They only pay interest and invest the extra equity in the stock market instead of paying the principal money to the bank. It’s the ultimate leverage. But the interest-only loans came with a dark side--negative amortization. People didn’t exactly know what they were getting themselves into. They wanted to play fund manager and, of course, they wanted low monthly payments. Little did they realize they might find themselves hanging up-side down with negative equity at the time of sale.
Silently, the reverse mortgages trickled in--because rates were rising, oil prices went up, inflation increased costs, and seniors couldn’t afford their medication. With their house being the only thing they had left, people figured if I got it, why not spend it? The nursing home would just try to get their grubby hands on it anyway. Hell no to that!
Next came the “cut off your ARM despite your rate” crowd and the panic of a volatile economy. “You better get into a fixed rate before it’s too late”, being their mantra. That’s where we are today since many of the early ARM’s from 3 to 7 years ago are now coming due. It’s funny, you’ll hear these ads all over the radio, trying to get people to convert. Some even use scare tactics with amusing roller coaster sounds and racks being stretched in the background. How creative!
The next great mortgage boom, I predict, will be the fixed 40 and 50 year mortgage. Many of you who I’ve spoken to on the phone and through email, have said the very same thing.
Look for more mortgage innovation to come as rates continue to rise. With inflated pricing in the housing market, longer fixed loans are the only way to keep rates low enough for many people to qualify for a home. Not to mention that people seem to like the idea of having a fixed payment per month versus any of the ARM options.
Keep in mind that many borrowers never intend to stay in the property for the full term of the loan, and will probably sell long before. Heck, a 70 year old taking out a 50 year mortgage won’t even be alive by then! He’ll be 120 years old! But the lenders don’t care as long as he pays his bills.
Currently, there are only a few lenders offering loans with these terms, but be on the look out for many more to come. Mortgage lenders have always been creative with their financing and keeping interest rates low (no matter what the term) is a great benefit for consumers. It helps get people into homes and that’s what counts. Keeping the real estate market liquid is crucial to the economy and lenders know this!
As a broker, branch manager or loan officer, if you want to survive in this competitive and cutthroat market, you’ve got to be aware of what’s in store. My advice is to focus on the ARM conversions for now but keep an eye out for the 40 and 50 year fixed loans arriving everywhere shortly. Only then will you be in a position to capitalize on the next great mortgage boom.
Thursday, February 7, 2008
The Most Powerful Phrases You Can Say To A Mortgage Prospect As A Loan Officer
Words are fun. But how you use them can be extremely powerful. They can immediately change your image from a rookie loan officer into a top producer instantly. Here’s how; the words you use when dealing with a mortgage prospect affect the conversation, and can even be the deciding factor in whether or not you get the loan. Yes, what you choose to say and how you say it, will decide how much money you earn this year.
Here are some key phrases I always teach my students, to ask their customers:
“Have you seen any other rates that interest you?”
This is a great question to ask, in order to gauge how much the prospect has been shopping around. If they have a rate already in mind, you can see if you can beat that rate. If they tell you an interest rate that seems too good to be true, and they are dead set on that rate, you’ll want to know this upfront so you don’t waste your time. Using this phrase gets the prospect to unknowingly show their cards.
“How soon would you like to close?”
This gives you an idea of the customer’s timeframes and motivations. If they are ending a lease/selling a house in the near future, and are buying a property, you’ll want to make sure you are aware of the timeframes. Can one lender close faster than another? Yes. And with experience, you’ll know who to place the loan with. You’ll want to set the customer’s expectations regarding the loan process and the timeframes involved. Asking this question puts you on the same page as the prospect, and lets them know that you are working with them to get the deal done.
“When would you like to get started?”
When the sales call is going well, and you can feel the conversation flip over from “you and me” into “us and we”, use this phrase to get the customer to say “yes” to you. When you can feel the sale about to be made, the response is almost always, “I’d like to get started right now. What do I have to do?” This is your green light. Take it.
“What else should I know regarding your finances? I want to make sure I can get you the lowest rate possible.”
I love this phrase, and it’s even included on my Sink or Swim Worksheets, http://www.loanclosingsystem.com I use it to uncover all those little nasty “surprises” that seem to come-up along the way. Customers won’t tell you their dirty secrets, but this sentence will diffuse financial bombs before they explode. Believe me, it will save you a tremendous amount of time and countless headaches!
“How does that sound?”
I use this phrase to gather a response from the customer and get feedback. When the conversation dies down and you are the one doing most of the talking, stop yourself. Ask, “How does that sound?” and wait for a reply. It gives the customer a chance to catch his breath and respond.
“Which loan program do you prefer?”
This phrase changes a “yes-no” decision into to a “yes” decision, and assumes that the prospect is moving forward. By using wordage that ASSUMES that the loan is underway and heading to the closing table, the customer will come along with you for the ride. Like magic, the loan process has begun!
“To get you the lowest rate, I’ll need to gather a bit more information from you. Do you have a few minutes?”
Never, ever, EVER say the word “application”. It scares people, and can cost you the loan. What I always say is, “I’ll need to gather a bit more information to see how low a rate we can get you, do you have a few minutes?” This way, you begin filling out the 1003 application, without the prospect knowing that it’s an APPLICATION. Also, you’ve re-emphasized the benefit of a LOW RATE. And it’s the rate incentive that propels them to complete the next step of the process.
And my all-time favorite key phrase… “Ok, now we’ll just need to take a quick peek at your credit. What’s your social?”
With identity theft at an all-time high, getting over this hurdle is the most difficult in the application process. You can do the loan, or quote an accurate rate without the credit report, but getting it can be troublesome. Never, ever say, “we need to pull your credit”. To a loan prospect, this is scary talk. They think…“PULL MY CREDIT!, Oh my god! That means that there will be inquiries on my report, my score will drop and I’ll be blacklisted and never get a loan”. Instead, just say “We need to just take a quick peek at your credit, what’s your social?” Can you see how non-threatening this better phrase is? It isn’t so scary after all, is it? Just a little, itsy, bitsy, teenie weenie, small, tiny, short, sweet, quick, mini peekie weekie. ;-)
How many deals have you lost by using the “wrong” words? I bet it’s more than you care to count. On your next loan, try some of my phrases, and you’ll immediately see an impact to your bottom line.
Here are some key phrases I always teach my students, to ask their customers:
“Have you seen any other rates that interest you?”
This is a great question to ask, in order to gauge how much the prospect has been shopping around. If they have a rate already in mind, you can see if you can beat that rate. If they tell you an interest rate that seems too good to be true, and they are dead set on that rate, you’ll want to know this upfront so you don’t waste your time. Using this phrase gets the prospect to unknowingly show their cards.
“How soon would you like to close?”
This gives you an idea of the customer’s timeframes and motivations. If they are ending a lease/selling a house in the near future, and are buying a property, you’ll want to make sure you are aware of the timeframes. Can one lender close faster than another? Yes. And with experience, you’ll know who to place the loan with. You’ll want to set the customer’s expectations regarding the loan process and the timeframes involved. Asking this question puts you on the same page as the prospect, and lets them know that you are working with them to get the deal done.
“When would you like to get started?”
When the sales call is going well, and you can feel the conversation flip over from “you and me” into “us and we”, use this phrase to get the customer to say “yes” to you. When you can feel the sale about to be made, the response is almost always, “I’d like to get started right now. What do I have to do?” This is your green light. Take it.
“What else should I know regarding your finances? I want to make sure I can get you the lowest rate possible.”
I love this phrase, and it’s even included on my Sink or Swim Worksheets, http://www.loanclosingsystem.com I use it to uncover all those little nasty “surprises” that seem to come-up along the way. Customers won’t tell you their dirty secrets, but this sentence will diffuse financial bombs before they explode. Believe me, it will save you a tremendous amount of time and countless headaches!
“How does that sound?”
I use this phrase to gather a response from the customer and get feedback. When the conversation dies down and you are the one doing most of the talking, stop yourself. Ask, “How does that sound?” and wait for a reply. It gives the customer a chance to catch his breath and respond.
“Which loan program do you prefer?”
This phrase changes a “yes-no” decision into to a “yes” decision, and assumes that the prospect is moving forward. By using wordage that ASSUMES that the loan is underway and heading to the closing table, the customer will come along with you for the ride. Like magic, the loan process has begun!
“To get you the lowest rate, I’ll need to gather a bit more information from you. Do you have a few minutes?”
Never, ever, EVER say the word “application”. It scares people, and can cost you the loan. What I always say is, “I’ll need to gather a bit more information to see how low a rate we can get you, do you have a few minutes?” This way, you begin filling out the 1003 application, without the prospect knowing that it’s an APPLICATION. Also, you’ve re-emphasized the benefit of a LOW RATE. And it’s the rate incentive that propels them to complete the next step of the process.
And my all-time favorite key phrase… “Ok, now we’ll just need to take a quick peek at your credit. What’s your social?”
With identity theft at an all-time high, getting over this hurdle is the most difficult in the application process. You can do the loan, or quote an accurate rate without the credit report, but getting it can be troublesome. Never, ever say, “we need to pull your credit”. To a loan prospect, this is scary talk. They think…“PULL MY CREDIT!, Oh my god! That means that there will be inquiries on my report, my score will drop and I’ll be blacklisted and never get a loan”. Instead, just say “We need to just take a quick peek at your credit, what’s your social?” Can you see how non-threatening this better phrase is? It isn’t so scary after all, is it? Just a little, itsy, bitsy, teenie weenie, small, tiny, short, sweet, quick, mini peekie weekie. ;-)
How many deals have you lost by using the “wrong” words? I bet it’s more than you care to count. On your next loan, try some of my phrases, and you’ll immediately see an impact to your bottom line.
Monday, February 4, 2008
The Lifetime Value Of A Loan Officer In The Mortgage Industry
Owners of mortgage companies, please forgive me. I’m about to let your employees in on a little secret—they have to option to leave you at any moment. And, many of them will.
New career opportunities are abundant in the mortgage industry. And unless you start treating your top producer’s differently, they may look elsewhere. The loan officer not satisfied at your company today—may be the loan officer working down the block at your competitor’s firm tomorrow. It’s the sad truth that the mortgage industry can be cut-throat—even inside the office!!!! But then again…that’s business. ;-)
Company owners, should really re-evaluate the way they treat their employees. Make a goal this year to grow your mortgage business, instead of just trying to replace the people who have left for greener pastures. During my consulting practice, working with company owners, I’ve seen this happen time and time again. Loan officer retention is always a problem, and keeping your top producer’s happy is an ongoing process.
Think about it. How much are your top producers REALLY worth to you? How much do they produce for you per month? How much of your bottom-line is attributed to the top 20% of your office? What would happen if these people left you? How much money would you REALLY lose? Write this figure down. I think you’d be surprised.
All too often, employers view their employees as nothing more than liabilities…draining their company assets. Employers change commission structures, reduce benefits, increase working hours, implement new rules and make changes to suit the profit margins of the business. But they don’t realize that this short-term thinking to increase profitability, has detrimental long-term effects and can actually harm their business! With changes like these, it’s no wonder why loan officers leave in response.
Remember, these people are what I like to call your “producing assets”, and over the lifetime of their service to you, are worth many hundreds of thousands of dollars to YOUR company’s profits.
In business, you may have heard of the “lifetime value of a customer”. It’s a common phrase used in marketing and it is extremely powerful. What “lifetime value” means is how much is your customer truly worth to you in terms of money, over the entire course of their relationship with you. It’s a quantifiable figure. It what your customer base spends with you.
For example, if you know an average customer will buy X amount from you, and they’ll stay for a certain length of time and re-purchase or buy other items from you, it’s how much they are worth to you in total. This figure gives you the lifetime value of the customer. It also tells you exactly how much you can spend to attract that customer to your business, and still make a profit (based on their future purchases). The lifetime value of your employees is no different.
Think about it. How many employees do you have? How long does the average loan officer stay with your firm? How much over the life of their relationship with you, did they produce in commission income? Now, how much did the top producers in your officer produce in commissions, before they left? Write these figures down. Then do the math.
For example, if you know that for every new, qualified producing loan officer you hire, that they stay with you an average of 8 months, and their average commission income to the firm is $22,000 per month (gross), you know that their lifetime value to you is $176,000. That’s a big future revenue stream.
Add another qualified producing loan officer, and you’ve effectively added another $176,000 to your bottom-line. Get your current loan officers to stay with you for an extra average month, and you’ve increased your profit another $22,000 per month per loan officer. Can you see how powerful this is?
Of course, not all loan officers are created equal. You’ll notice that I used the words “qualified” and “producing” before loan officer, meaning that the person is strongly motivated to succeed, willing to make the necessary phone calls, and has the educational background and sufficient industry knowledge to sell and close a loan effectively. That is what a fully qualified producing loan officer is. The definition of a top producer is one who is willing to do all the above yet go the extra mile to get the deal closed. They never stop. They are relentless. As every loan officer should aspire to be.
The lifetime value of your employees is a quantifiable figure that tells you exactly how much your “loan officer assets” are truly worth to you. Company owners, when you stop looking at your employees as liabilities, and start treating them like investments, it’s a powerful paradigm shift that can explode your company’s growth.
New career opportunities are abundant in the mortgage industry. And unless you start treating your top producer’s differently, they may look elsewhere. The loan officer not satisfied at your company today—may be the loan officer working down the block at your competitor’s firm tomorrow. It’s the sad truth that the mortgage industry can be cut-throat—even inside the office!!!! But then again…that’s business. ;-)
Company owners, should really re-evaluate the way they treat their employees. Make a goal this year to grow your mortgage business, instead of just trying to replace the people who have left for greener pastures. During my consulting practice, working with company owners, I’ve seen this happen time and time again. Loan officer retention is always a problem, and keeping your top producer’s happy is an ongoing process.
Think about it. How much are your top producers REALLY worth to you? How much do they produce for you per month? How much of your bottom-line is attributed to the top 20% of your office? What would happen if these people left you? How much money would you REALLY lose? Write this figure down. I think you’d be surprised.
All too often, employers view their employees as nothing more than liabilities…draining their company assets. Employers change commission structures, reduce benefits, increase working hours, implement new rules and make changes to suit the profit margins of the business. But they don’t realize that this short-term thinking to increase profitability, has detrimental long-term effects and can actually harm their business! With changes like these, it’s no wonder why loan officers leave in response.
Remember, these people are what I like to call your “producing assets”, and over the lifetime of their service to you, are worth many hundreds of thousands of dollars to YOUR company’s profits.
In business, you may have heard of the “lifetime value of a customer”. It’s a common phrase used in marketing and it is extremely powerful. What “lifetime value” means is how much is your customer truly worth to you in terms of money, over the entire course of their relationship with you. It’s a quantifiable figure. It what your customer base spends with you.
For example, if you know an average customer will buy X amount from you, and they’ll stay for a certain length of time and re-purchase or buy other items from you, it’s how much they are worth to you in total. This figure gives you the lifetime value of the customer. It also tells you exactly how much you can spend to attract that customer to your business, and still make a profit (based on their future purchases). The lifetime value of your employees is no different.
Think about it. How many employees do you have? How long does the average loan officer stay with your firm? How much over the life of their relationship with you, did they produce in commission income? Now, how much did the top producers in your officer produce in commissions, before they left? Write these figures down. Then do the math.
For example, if you know that for every new, qualified producing loan officer you hire, that they stay with you an average of 8 months, and their average commission income to the firm is $22,000 per month (gross), you know that their lifetime value to you is $176,000. That’s a big future revenue stream.
Add another qualified producing loan officer, and you’ve effectively added another $176,000 to your bottom-line. Get your current loan officers to stay with you for an extra average month, and you’ve increased your profit another $22,000 per month per loan officer. Can you see how powerful this is?
Of course, not all loan officers are created equal. You’ll notice that I used the words “qualified” and “producing” before loan officer, meaning that the person is strongly motivated to succeed, willing to make the necessary phone calls, and has the educational background and sufficient industry knowledge to sell and close a loan effectively. That is what a fully qualified producing loan officer is. The definition of a top producer is one who is willing to do all the above yet go the extra mile to get the deal closed. They never stop. They are relentless. As every loan officer should aspire to be.
The lifetime value of your employees is a quantifiable figure that tells you exactly how much your “loan officer assets” are truly worth to you. Company owners, when you stop looking at your employees as liabilities, and start treating them like investments, it’s a powerful paradigm shift that can explode your company’s growth.
Friday, February 1, 2008
The In’s And Out’s Of Mortgage Websites As A Loan Officer
One of the most profitable low-cost investments you can make in your business is to have a mortgage website that not only creates your company’s online presence, but also up-sells the customer on your products and services. But finding a website provider that does the job effectively is not always easy.
To create a mortgage website you have three choices:
1. Go it alone and design it yourself.
2. Hire a web design firm to custom build a mortgage site for you.
3. Use a ready-made instant website from a design company that specializes just in the mortgage industry.
There are advantages and disadvantages to each. Yes, you can create a website yourself from scratch and maintain full control over is, but how much time will this really take? How professional will your homemade site look? And, if it takes you 30 to 40 hours to create the website and get it up and running, this is time taken away from your existing business and potentially lost sales.
The total cost to design your website, isn’t just the site itself, but also the “opportunity cost” of losing your time. Not to mention, the frustration of dealing with unfamiliar technology.
If you decide to hire a firm to design your site as a custom build, then you should know that these services come at a hefty price—usually 2 to 3 thousand dollars upfront and an ongoing maintenance and hosting fee. Think about it, every time you want to update or change the site, you will be charged another $100 to $150 for design work. Not only have you lost control over the site, but the costs can quickly mount.
The third choice is to use one of the ready-made instant mortgage website templates put out by design companies that specialize just in the mortgage industry. These people have already done the work for you, and it’s simply a matter of choosing the types of interactive features you want to put on your website. You can even modify and update your website yourself, right through your web browser. If you can type a letter, you can manage your website. It’s that easy!
Things such as having an online 1003 loan application, current mortgage rates, bond index, feedback form, etc. are all features that will enhance your online image. In today’s world, these aren’t just nice extras to have--they are necessities.
Consumers today expect a certain level of professionalism, especially if they are going to “trust” your mortgage company and do business with you. With all the fly-by-night firms out there, you can’t afford to take a chance with a lackluster amateur image. This is especially true if you deal with customers mostly over the phone and NOT in person. The website may be the only chance they get to “meet” you.
Before committing to any web design company, here are some things to consider:
* What is the upfront cost to get started?
* What is the ongoing monthly cost?
* Who pays for the hosting of the site and is that included?
* Who owns the rights to the website?
* Can I use my own website domain name or do I have to use yours?
* What interactive features do you offer?
* Do these interactive features cost extra or are they included in the price?
* Can the website download a 1003 application directly into Calyx point, so I don’t have to retype the information?
* Are the mortgage rates and bond information updated in real-time on the site?
* How many other sites similar to mine are already out there?
* Do you offer just one type of mortgage website or do you have a number of choices?
* How do I update my website?
* Can I update the website myself via the Internet or do I have to have one of your designers do it?
* How do I do this, if I am “computer illiterate”?
* Do you have a free trial so I can test out your services to see if I like them?
* Do I have to get approval from my mortgage net branch before I can put a website up?
* What happens if I change mortgage companies?
These are just some of the questions you need to ask no matter which service you choose. Yes, designing a website yourself gives you the ultimate control over the look and feel of the site, but it comes with a price. Since most mortgage company sites are the same and have the same types of features (online application, rate watch list, bond info, etc.), why not use the services from a company that has already done the work for you? Not only will the site be up and running quicker, but you’ll have a lot less headaches in the long run.
Bottom line, my recommendation is keep it simple, and use one of the existing mortgage website tools out there.
To create a mortgage website you have three choices:
1. Go it alone and design it yourself.
2. Hire a web design firm to custom build a mortgage site for you.
3. Use a ready-made instant website from a design company that specializes just in the mortgage industry.
There are advantages and disadvantages to each. Yes, you can create a website yourself from scratch and maintain full control over is, but how much time will this really take? How professional will your homemade site look? And, if it takes you 30 to 40 hours to create the website and get it up and running, this is time taken away from your existing business and potentially lost sales.
The total cost to design your website, isn’t just the site itself, but also the “opportunity cost” of losing your time. Not to mention, the frustration of dealing with unfamiliar technology.
If you decide to hire a firm to design your site as a custom build, then you should know that these services come at a hefty price—usually 2 to 3 thousand dollars upfront and an ongoing maintenance and hosting fee. Think about it, every time you want to update or change the site, you will be charged another $100 to $150 for design work. Not only have you lost control over the site, but the costs can quickly mount.
The third choice is to use one of the ready-made instant mortgage website templates put out by design companies that specialize just in the mortgage industry. These people have already done the work for you, and it’s simply a matter of choosing the types of interactive features you want to put on your website. You can even modify and update your website yourself, right through your web browser. If you can type a letter, you can manage your website. It’s that easy!
Things such as having an online 1003 loan application, current mortgage rates, bond index, feedback form, etc. are all features that will enhance your online image. In today’s world, these aren’t just nice extras to have--they are necessities.
Consumers today expect a certain level of professionalism, especially if they are going to “trust” your mortgage company and do business with you. With all the fly-by-night firms out there, you can’t afford to take a chance with a lackluster amateur image. This is especially true if you deal with customers mostly over the phone and NOT in person. The website may be the only chance they get to “meet” you.
Before committing to any web design company, here are some things to consider:
* What is the upfront cost to get started?
* What is the ongoing monthly cost?
* Who pays for the hosting of the site and is that included?
* Who owns the rights to the website?
* Can I use my own website domain name or do I have to use yours?
* What interactive features do you offer?
* Do these interactive features cost extra or are they included in the price?
* Can the website download a 1003 application directly into Calyx point, so I don’t have to retype the information?
* Are the mortgage rates and bond information updated in real-time on the site?
* How many other sites similar to mine are already out there?
* Do you offer just one type of mortgage website or do you have a number of choices?
* How do I update my website?
* Can I update the website myself via the Internet or do I have to have one of your designers do it?
* How do I do this, if I am “computer illiterate”?
* Do you have a free trial so I can test out your services to see if I like them?
* Do I have to get approval from my mortgage net branch before I can put a website up?
* What happens if I change mortgage companies?
These are just some of the questions you need to ask no matter which service you choose. Yes, designing a website yourself gives you the ultimate control over the look and feel of the site, but it comes with a price. Since most mortgage company sites are the same and have the same types of features (online application, rate watch list, bond info, etc.), why not use the services from a company that has already done the work for you? Not only will the site be up and running quicker, but you’ll have a lot less headaches in the long run.
Bottom line, my recommendation is keep it simple, and use one of the existing mortgage website tools out there.
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